A Soft Edge Target Zone Model: Theory And Application To Hong Kong

Hong Kong’s currency is pegged to the US dollar in a currency board arrangement. In autumn 2003, the Hong Kong dollar appreciated from close to 7.80 per US dollar to 7.70, as investors feared that the currency board would be abandoned. In the wake of this appreciation, the monetary authorities revamped the one-sided currency board mechanism into a symmetric two-sided system with a narrow exchange rate band. This paper reviews the characteristics of the new currency board arrangement and embeds a theoretical soft edge target zone model typifying many intermediate regimes, to explain the notable achievement of speculative peace and credibility since May 2005.

Off-the-Record Target Zones: Theory with an Application to Hong Kongs Currency Board

This paper provides a modelling framework for evaluating the exchange rate dynamics of a target zone regime with undisclosed bands. We generalize the literature to allow for asymmetric one-sided regimes. Market participants' beliefs concerning an undisclosed band change as they learn more about central bank intervention policy. We apply the model to Hong Kong's one-sided currency board mechanism. In autumn 2003, the Hong Kong dollar appreciated from close to 7.80 per US dollar to 7.70, as investors feared that the currency board would be abandoned. In the wake of this appreciation, the monetary authorities finally revamped the regime as a symmetric two-sided system with a narrow exchange rate band.

Gene flow among wild and domesticated almond species: insights from chloroplast and nuclear markers

Hybridization has played a central role in the evolutionary history of domesticated plants. Notably, several breeding programs relying on gene introgression from the wild compartment have been performed in fruit tree species within the genus Prunus but few studies investigated spontaneous gene flow among wild and domesticated Prunus species. Consequently, a comprehensive understanding of genetic relationships and levels of gene flow between domesticated and wild Prunus species is needed. Combining nuclear and chloroplastic microsatellites, we investigated the gene flow and hybridization among two key almond tree species, the cultivated Prunus dulcis and one of the most widespread wild relative Prunus orientalis in the Fertile Crescent. We detected high genetic diversity levels in both species along with substantial and symmetric gene flow between the domesticated P. dulcis and the wild P. orientalis. These results were discussed in light of the cultivated species diversity, by outlining the frequent spontaneous genetic contributions of wild species to the domesticated compartment. In addition, crop-to-wild gene flow suggests that ad hoc transgene containment strategies would be required if genetically modified cultivars were introduced in the northwestern Mediterranean.

Subsidies as Optimal Fiscal Stimuli

In the theoretical macroeconomics literature, fiscal policy is almost uniformly taken to mean taxing and spending by a ‘benevolent government’ that exploits the potential aggregate demand externalities inherent in the imperfectly competitive nature of goods markets. Whilst shown to raise aggregate output and employment, these policies crowd-out private consumption and hence typically reduce welfare. In this paper we consider the use of ‘tax-and-subsidise’ instead of ‘taxand- spend’ policies on account of their widespread use by governments, even in the recent recession, to stimulate economic activity. Within a static general equilibrium macro-model with imperfectly competitive good markets we examine the effect of wage and output subsidies and show that, for a small open economy, positive tax and subsidy rates exist which maximise welfare, rendering no intervention as a suboptimal state. We also show that, within a two-country setting, a Nash non-cooperative symmetric equilibrium with positive tax and subsidy rates exists, and that cooperation between trading partners in setting these rates is more expansionary and leads to an improvement upon the non-cooperative solution.

A model category structure on the category of simplicial multicategories

We establish a Quillen model structure on simplicial(symmetric) multicategories. It extends the model structure on simplicial categories due to J. Bergner [2]. We observe that our technique of proof enables us to prove a similar result for (symmetric) multicategories enriched over other monoidal model categories than simplicial sets. Examples include small categories, simplicial abelian groups and compactly generated Hausdorff spaces.

Bargaining one-dimensional policies and the efficiency of super majority rules

We consider negotiations selecting one-dimensional policies. Individuals have single-peaked preferences, and they are impatient. Decisions arise from a bargaining game with random proposers and (super) majority approval, ranging from the simple majority up to unanimity. The existence and uniqueness of stationary subgame perfect equilibrium is established, and its explicit characterization provided. We supply an explicit formula to determine the unique alternative that prevails, as impatience vanishes, for each majority. As an application, we examine the efficiency of majority rules. For symmetric distributions of peaks unanimity is the unanimously preferred majority rule. For asymmetric populations rules maximizing social surplus are characterized.

Estimation of the Spatial Weights Matrix under Structural Constraints

While estimates of models with spatial interaction are very sensitive to the choice of spatial weights, considerable uncertainty surrounds de nition of spatial weights in most studies with cross-section dependence. We show that, in the spatial error model the spatial weights matrix is only partially identi ed, and is fully identifi ed under the structural constraint of symmetry. For the spatial error model, we propose a new methodology for estimation of spatial weights under the assumption of symmetric spatial weights, with extensions to other important spatial models. The methodology is applied to regional housing markets in the UK, providing an estimated spatial weights matrix that generates several new hypotheses about the economic and socio-cultural drivers of spatial di¤usion in housing demand.

Marriage as a Rat Race: Noisy Pre-Marital Investments with Assortative Matching

We study the incentive to invest to improve marriage prospects, in a frictionless marriage market with non-transferable utility. Stochastic returns to investment eliminate the multiplicity of equilibria in models with deterministic returns, and a unique equilibrium exists under reasonable conditions. Equilibrium investment is efficient when the sexes are symmetric. However, when there is any asymmetry, including an unbalanced sex ratio, investments are generically excessive. For example, if there is an excess of boys, then there is parental over-investment in boys and under-investment in girls, and total investment will be excessive.

Correlated equilibria, good and bad: an experimental study

We report results from an experiment that explores the empirical validity of correlated equilibrium, an important generalization of the Nash equilibrium concept. Specifically, we seek to understand the conditions under which subjects playing the game of Chicken will condition their behavior on private, third–party recommendations drawn from known distributions. In a “good–recommendations” treatment, the distribution we use is a correlated equilibrium with payoffs better than any symmetric payoff in the convex hull of Nash equilibrium payoff vectors. In a “bad–recommendations” treatment, the distribution is a correlated equilibrium with payoffs worse than any Nash equilibrium payoff vector. In a “Nash–recommendations” treatment, the distribution is a convex combination of Nash equilibrium outcomes (which is also a correlated equilibrium), and in a fourth “very–good–recommendations” treatment, the distribution yields high payoffs, but is not a correlated equilibrium. We compare behavior in all of these treatments to the case where subjects do not receive recommendations. We find that when recommendations are not given to subjects, behavior is very close to mixed–strategy Nash equilibrium play. When recommendations are given, behavior does differ from mixed–strategy Nash equilibrium, with the nature of the differ- ences varying according to the treatment. Our main finding is that subjects will follow third–party recommendations only if those recommendations derive from a correlated equilibrium, and further, if that correlated equilibrium is payoff–enhancing relative to the available Nash equilibria.

Expert Information and Majority Decisions

This paper studies dichotomous majority voting in common interest committees where each member receives not only a private signal but also a public signal observed by all of them. The public signal represents, e.g. expert information presented to an entire committee and its quality is higher than that of each individual private signal. We identify two informative symmetric strategy equilibria, namely i) the mixed strategy equilibrium where each member randomizes between following the private and public signals should they disagree; and ii) the pure strategy equilibrium where they follow the public signal for certain. The former outperforms the latter. The presence of the public signal precludes the equilibrium where every member follows their own signal, which is an equilibrium in the absence of the public signal. The mixed strategy equilibrium in the presence of the public signal outperforms the sincere voting equilibrium without the public signal, but the latter may be more efficient than the pure strategy equilibrium in the presence of the public signal. We suggest that whether expert information improves committee decision making depends on equilibrium selection.

Information Design

There are two ways of creating incentives for interacting agents to behave in a desired way. One is by providing appropriate payoff incentives, which is the subject of mechanism design. The other is by choosing the information that agents observe, which we refer to as information design. We consider a model of symmetric information where a designer chooses and announces the information structure about a payoff relevant state. The interacting agents observe the signal realizations and take actions which affect the welfare of both the designer and the agents. We characterize the general finite approach to deriving the optimal information structure for the designer - the one that maximizes the designer's ex ante expected utility subject to agents playing a Bayes Nash equilibrium. We then apply the general approach to a symmetric two state, two agent, and two actions environment in a parameterized underlying game and fully characterize the optimal information structure: it is never strictly optimal for the designer to use conditionally independent private signals; the optimal information structure may be a public signal or may consist of correlated private signals. Finally, we examine how changes in the underlying game affect the designer's maximum payoff. This exercise provides a joint mechanism/information design perspective.

Human Primary Auditory Cortex Follows the Shape of Heschl's Gyrus.

The primary auditory cortex (PAC) is central to human auditory abilities, yet its location in the brain remains unclear. We measured the two largest tonotopic subfields of PAC (hA1 and hR) using high-resolution functional MRI at 7 T relative to the underlying anatomy of Heschl's gyrus (HG) in 10 individual human subjects. The data reveals a clear anatomical-functional relationship that, for the first time, indicates the location of PAC across the range of common morphological variants of HG (single gyri, partial duplications, and complete duplications). In 20/20 individual hemispheres, two primary mirror-symmetric tonotopic maps were clearly observed with gradients perpendicular to HG. PAC spanned both divisions of HG in cases of partial and complete duplications (11/20 hemispheres), not only the anterior division as commonly assumed. Specifically, the central union of the two primary maps (the hA1-R border) was consistently centered on the full Heschl's structure: on the gyral crown of single HGs and within the sulcal divide of duplicated HGs. The anatomical-functional variants of PAC appear to be part of a continuum, rather than distinct subtypes. These findings significantly revise HG as a marker for human PAC and suggest that tonotopic maps may have shaped HG during human evolution. Tonotopic mappings were based on only 16 min of fMRI data acquisition, so these methods can be used as an initial mapping step in future experiments designed to probe the function of specific auditory fields.

The role of fixed delays in neuronal rate models

Fixed delays in neuronal interactions arise through synaptic and dendritic processing. Previous work has shown that such delays, which play an important role in shaping the dynamics of networks of large numbers of spiking neurons with continuous synaptic kinetics, can be taken into account with a rate model through the addition of an explicit, fixed delay. Here we extend this work to account for arbitrary symmetric patterns of synaptic connectivity and generic nonlinear transfer functions. Specifically, we conduct a weakly nonlinear analysis of the dynamical states arising via primary instabilities of the stationary uniform state. In this way we determine analytically how the nature and stability of these states depend on the choice of transfer function and connectivity. While this dependence is, in general, nontrivial, we make use of the smallness of the ratio in the delay in neuronal interactions to the effective time constant of integration to arrive at two general observations of physiological relevance. These are: 1 - fast oscillations are always supercritical for realistic transfer functions. 2 - Traveling waves are preferred over standing waves given plausible patterns of local connectivity.

Parallel spinors on pseudo-riemannian spin(q) manifolds

We study simply-connected irreducible non-locally symmetric pseudo-Riemannian Spin(q) manifolds admitting parallel quaternionic spinors.

Gains from switching and evolutionary stability in multi-player matrix games.

In this paper we unify, simplify, and extend previous work on the evolutionary dynamics of symmetric N-player matrix games with two pure strategies. In such games, gains from switching strategies depend, in general, on how many other individuals in the group play a given strategy. As a consequence, the gain function determining the gradient of selection can be a polynomial of degree N-1. In order to deal with the intricacy of the resulting evolutionary dynamics, we make use of the theory of polynomials in Bernstein form. This theory implies a tight link between the sign pattern of the gains from switching on the one hand and the number and stability of the rest points of the replicator dynamics on the other hand. While this relationship is a general one, it is most informative if gains from switching have at most two sign changes, as is the case for most multi-player matrix games considered in the literature. We demonstrate that previous results for public goods games are easily recovered and extended using this observation. Further examples illustrate how focusing on the sign pattern of the gains from switching obviates the need for a more involved analysis.